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The Advent of Capital Expansion in China:

A Case Study of Foxconn Production and the Impacts on its Workers

Pun Ngai and Jenny Chan

ABSTRACT

A startling 17 young workers attempted or committed suicide at the Foxconn


production facilities in China between January and August 2010 attracted worldwide
attention. This article looks at the historical development of Foxconn Technology
Group as a case to reveal the advent of rapid capital expansion in China and its
impacts on Chinese workers lives. It also provides an account on the social and
political origins of the advent of monopoly capital in China through a detailed study
of Foxconn production expansion. As a legend of capital expansion in manufacturing
industry, Foxconn is important and typical of its speed and its scale in the process of
capital accumulation on all regions of China. We attempt to look at this miracle of
capital by understanding the enigma of global capital, the nature of the transformative
state, and the Chinese growth model that results in rapid capital expansion but
precarious working conditions of workers. At stake, we argue that under the global
competition context a strong political regime with a divided nature and the making of
an unfinished working class contributed to the advent of monopoly capital and the
tragedy of working lives.

Keywords: capital, global electronics industry, state, workers, Foxconn Technology


Group

1
INTRODUCTION

The Foxconn tragedy has been dubbed the suicide express by Chinese and
international media. In the first eight months of 2010, a startling 17 young workers
attempted or committed suicide at the Foxconn production facilities in China,
bringing a worldwide attention to all Foxconns customers. 13 died, while four
survived their injuries.1 All were between 17 and 25 years oldin the prime of youth
and their loss called upon the concerned academics to closely study the changing
pattern of global capital accumulation and its impacts on workers. Foxconn is a
microcosm of the conditions that dominate the lives of Chinese migrant workers.
When Time magazine nominated workers in China as the runners-up to 2009 Person
of the Year,2 the editor commented that Chinese workers have brightened the future of
humanity by leading the world to economic recovery. The new generation of
Chinese migrant workers, however, seems to perceive themselves as losing their
futures. More than 900,000 young workers, who have been placed in the best
Foxconn factory-cum-dormitory environment, seemed only to show more anxieties,
and see fewer alternatives, than their peers.

This paper is part of this attempt that 20 universities from Mainland China, Hong
Kong, and Taiwan formed an independent Foxconn Research Group to understand the
working conditions of Foxconn between June and October 2010, the first phrase of
the ongoing research efforts.3 We collected 1,736 completed questionnaires and
conducted 300 in-depth interviews in 12 Foxconn factory areas; in addition, a team of
14 researchers carried out participation observation to work as frontline workers for
approximately a month in selected Foxconn facilities in South, Central, East and
North China. We strive to provide an account of the social and political origins of
global capital accumulation and the loss of workers lives by exploring the
management mode and working conditions of Foxconns labor regime.

Existing literature has long argued Chinas rise is a state-driven globalization


process in which the post-socialist state or the political regime has adopted a pro-
foreign investment open-door policy that facilitated an export-led growth model

1
See SACOM (Students and Scholars Against Corporate Misbehavior), Workers as machines: military
management in Foxconn (Hong Kong, 2010).
2
Time, 16 December 2009, Runners up: the Chinese worker.
3
Unless otherwise stated, the data throughout this article is drawn from the field and archival research
carried out by the authors and members of the Foxconn Research Group. The authors are grateful to the
members of the Foxconn Research Group.

2
entirely relied on joint-venture and later wholly-owned foreign capital.4 This foreign
direct investment (FDI)-dependent Chinese growth model, while distinguished itself
from East European transition market or East Asian developmental state model, has
generated astonishing economic growth but also social inequality in general and the
plights of workers lives in specific.5 This broad understanding, however, required a
deeper analysis on the specific development of FDI in a particular industry or
corporation and its evolution into an industrial oligarch.6 The new phenomenon of
monopoly capital refines an argument that most of the foreign-invested companies are
a preponderance of small- and medium-sized enterprises,7 and hence creates and
constrains an institutionalized capital-labor relationship. It also challenges the belief
that furthering and deepening of economic reform or the influx of foreign capital over
years would strengthen the basis for institutionalization of legal protections for
workers.8

To understand the social and political origins of the emergence of the industrial
oligarch in China, we provide a review of the nature of the transformative state, and
the creator of its economic model that has facilitated the expansion of capital that

4
Scott Wilson, Remade in China: Foreign Investors and Institutional Change in China (Oxford:
Oxford University Press, 2009); Loren Brandt and Thomas G. Rawski (eds), Chinas Great Economic
Transformation (Cambridge: Cambridge University Press, 2008); Doug Guthrie, Dragon in a Three-
Piece Suit: The Emergence of Capitalism in China (New Jersey: Princeton University Press, 1999);
Doug Guthrie, China and Globalization: The Social, Economic, and Political Transformation of
Chinese Society (New York: Routledge, revised edition, [2006] 2009); Mary E. Gallagher, Contagious
Capitalism: Globalization and the Politics of Labour in China (New Jersey: Princeton University
Press, 2005).
5
Ya-Sheng Huang (2003) states that Chinas large absorption of FDI is not necessary a sign of the
strengths of its economy, rather it may be a sign of some substantial distortions. Huang emphasized on
the negative impact on the development of domestic industries by a FDI-dependency economy. Ya-
Sheng Huang, Selling China: Foreign Direct Investment During the Reform Era (Cambridge:
Cambridge University Press, 2003); Ho-Fung Hung (ed.), China and the Transformation of Global
Capitalism (Baltimore: The Johns Hopkins University Press, 2009); Alvin Y. So, Rethinking the
Chinese developmental miracle, in Ho-Fung Hung (ed.), China and the Transformation of Global
Capitalism (Baltimore: The Johns Hopkins University Press, 2009), pp. 50-64; Dorothy J. Solinger,
States Gains, Labours Losses: China, France, and Mexico Choose Global Liaisons, 1980-2000
(Ithaca: Cornell University Press, 2009); Dorothy J. Solinger, Narratives of the Chinese Economic
Reforms: Individual Pathways from Plan to Market (New York: The Edwin Mellen Press, 2005); Mark
Selden and Jieh-Min Wu, The Chinese state, suppressed consumption and structures of inequality in
two epochs, Manuscript.
6
Eric Thun, Changing Lanes in China: Foreign Direct Investment, Local Governments, and Auto
Sector Development (Cambridge: Cambridge University Press, 2006); Tse-Kang Leng, State and
business in the era of globalization: the case of cross-strait linkages in the computer industry, The
China Journal, Iss. 53 (2005), pp. 63-79.
7
Huang, Selling China.
8
Ching-Kwan Lee, Against the Law: Labor Protests in Chinas Rustbelt and Sunbelt (Berkeley:
University of California Press, 2007); Michael A. Santoro, Profits and Principles: Global Capitalism
and Human Rights in China (Ithaca: Cornell University Press, 2000); Donald C. Clarke, Introduction:
The Chinese legal system since 1995: steady development and striking continuities The China
Quarterly, Vol. 191 (September 2007), pp. 555-566; Gallagher, Contagious Capitalism; Doug Guthrie,
Dragon in a Three-Piece Suit.

3
results in sacrifices of the labor rights in China.9 As a legend of capital expansion,
Foxconn is important and typical of is its speed and its scale in the process of capital
accumulation on all regions of China. On the top of looking at the race of global
capital competition and technology upgrading, this paper attempts to look at how a
strong but contested political regime and its making of an unfinished working class
contributed to the advent of monopoly capital and the tragedy of working lives.

FOXCONN: THE ELECTRONICS WORKSHOP OF THE WORLD

Hon Hai Precision Industry Company, more commonly known by its trade name
Foxconn, was founded in Taipei in 1974. Foxconn is the worlds largest contract
electronics manufacturer, providing electronic products to leading brands such as
Apple, HP, Dell, Nokia, Motorola, Sony, and Samsung. The company is poised to take
in over 50 per cent of the global electronics manufacturing and service industry
revenue by 2011.10 Under the leadership of founder and CEO Terry Gou, Foxconn
declares itself the most trusted and preferred partner in all aspects of global
electronics outsourcing to help customers de-risk their business.11

There are three stages of Foxconn development and evolution into an industrial
oligarch. The first stage is to step onto the mainland China when the country adopted
the open-door policy and the coastal development strategy. Driven by the Chinese
states favorable investment policy, in 1988 Hon Hai set up its first production facility
named Foxconn in the Special Economic Zone of Shenzhen, the first economic export
processing zone built by the central government in 1980. In the early stage of
production, the middle- and high-ranked management was solely controlled by
Taiwanese employees, who had little trust with mainland Chinese elites or workers.
The military corporate culture and management methodology was notorious.12
Benefiting by the inexpensive and massive supply of labor in China, Foxconn, in its
second stage of rapid expansion during the 1990s, witnessed a growing division of
labor, diversification of production lines, and an introduction of Chinese elites to
work at the low level of management. There was a higher level of infusion between
Taiwanese and Chinese management, despite little trust on Chinese managers and

9
Anita Chan, Chinas Workers under Assault: The Exploitation of Labor in a Globalizing Economy
(New York: M. E. Sharpe, 2001).
10
EE Times Asia, 2 August 2010, Foxconn to Rule EMS (Electronics Manufacturing and Service)
Market in 2011, Thanks to Apple.
11
Hon Hai Precision Industry Co., Ltd., 26 April 2010, Non-Consolidated Results for the Twelve
Month Periods Ended 31 December 2009.
12
Anita Chan and Hon-Zen Wang, The impact of the state on workers conditions: comparing
Taiwanese factories in China and Vietnam. Pacific Affairs, Vol. 77, No. 4 (2005), pp. 629-646.

4
workers persisted. Of production bases growing into giant size and gaining its
reputation in the industry, Foxconn remained concentration in two regions: the Pearl
River Delta and the Yangtze River Delta where local governments provided it with
huge piece of land, good transportation systems, and other key infrastructures.

The third stage is the advent of monopoly of capital by merging as well as by


relocating their production facilities in all regions of China by particularly tapping
into Chinas go-west development strategy in the 2000s. The suicide wave in 2010
created a strategic moment when it further expanded and relocated into big cities in
the North, Central, and West. Foxconn projected a huge workforce of 1,300,000
people in China alone by the end of 2011.13 By merging and acquiring small or
medium electronic plants, and by rationalizing its internal production chains (from
raw material extractions, parts and components procurement, to final assembly of
products), Foxconn was able to compete down its rivals to secure production orders
from brands and retailers. Foxconn is a telling example of the global just-in-time
production and seasonal change of electronics fashion which results in a specific
management model or factory regime that affects the lives of workers.

Foxconns company name and sale revenues

The name Fox-conn literally means that the corporation can produce electronics
connectors comparable to foxs speed. It is also derived from the parent company Hon
Hais massive production of connectors in the 1980s when the personal computer
market took shape. The initial corporate strategy of Foxconn was to invest in lower-
cost manufacturing in mainland China, while retaining research and development
(R&D) in its Taiwan headquarters. As business grew explosively, Foxconn had
established more than 100 subsidiaries and several hundreds of branch offices based
in China, Taiwan, Japan, Russia, Southeast Asia, Europe, and the Americans,14 driving
cutting-edge mechanical, optical, and electrical integration at the international level.
Foxconn boasts that it provides its customers with the best speed, quality,
engineering services, efficiency, and added value, what it calls the five core
competences.15

In 2001, Hon Hai became Taiwans largest private-sector company in terms of

13
The Independent, 19 August 2010, Foxconn Gets the Pompoms out to Raise Morale at Suicide
Factory.
14
Foxconn Technology Group, Fushikang Keji Jituan Qunqiu Buju (Global Distribution), (2010),
Online Map at http://www.foxconn.com.cn/quanqiushiliangbujutu/000.html.
15
Foxconn Technology Group, Corporate Social and Environmental Responsibility (CSER) Annual
Report 2008 (Taiwan, 2009), p. 8.

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sales, generating revenue of US$4.4 billion.16 BusinessWeek, as early as in 2002,
acclaimed Terry Gou as the king of outsourcing17when Foxconn was still behind
longstanding industry leaders Solectron18 and Flextronics.19 Since 2003, the Taiwan-
invested company has been Chinas biggest exporter, and Foxconns revenue reached
an unprecedented high of US$61.8 billion in 2008.20 Despite the sharp contraction of
American and European demand for consumer electronics during the recent economic
downturn, Foxconn generated US$59.3 billion in revenue in 2009, only a slight drop
in sales of 4.1 per cent from the previous year.21 As investors and consumers
worldwide have regained some confidence in the global economy, Foxconn gained
new orders and workers were required to meet production deadlines, generating
unprecedented level of profits. In September 2010, Foxconn recorded revenue of
NT$253.48 billion (US$8.3 billion), 68.2 per cent increase on year; and accumulated
revenues for the first nine months peaked NT$1.95 trillion (US$60.8 billion), up
nearly 63 per cent on year.22

Foxconns stunning economic success testifies Chinas rise-up in the world and
Chinas export-oriented growth model that it could deliver economic growth even in
the time of global financial crisis. It also demonstrates the necessity of the expanded
capital accumulation of global capitalism on a pace faster than our imagination.
Asian-invested enterprises and domestic manufacturers on mainland China have risen
quickly to become contractors and sub-contractors to Western multinationals, based
on the intensive use of low-paid internal migrant workers. As a result of global
competition and restructuring, Foxconn stood out and competed down other potential
competitors. In these over twenty years since its initial investment in 1988, Foxconn
has grown to become the largest exporter in China.

Foxconn products and customers

Under the pressure of global competition on just-in-time production and


technology upgrading in electronic industry, the enigma of Foxconn is to control
expenses and reduce product time-to-market aggressively. Foxconn churns out a wide
array of low-end to technologically sophisticated products for top brands. It also

16
Foxconn Technology Group, CSER Annual Report 2008, pp. 10-11.
17
BusinessWeek, 8 July 2002, Chairman Terry T.M. Gou, Hon Hai Precision Industry.
18
Julie M. LaNasa, Solectron: Building Customer Teams to Deliver on your Companys Value
Proposition, (Collaborative Consulting, 2002).
19
Flextronics acquired Solectron in June 2007. Flextronics, 4 June 2007, Flextronics to Acquire
Solectron.
20
Foxconn Technology Group, CSER Annual Report 2008, p. 11.
21
Fortune, 2010, Global 500 Companies: Hon Hai Precision IndustryRank 112.
22
Digitimes, 8 October 2010, Foxconn Reports Record High Revenues in September.

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provides design engineering and mechanical tooling services. The technology group
has expanded its 3C product rangecomputers (desktop, laptop, and tablet
computers), communications equipment (mobile phones and smartphones), and
consumer products (digital music players, digital cameras, game consoles, and LCD
TVs)to include four more Cs: cars (automotive electronics), channels (for
electronics and computer products, such as motherboards), content (e-book readers, a
software and hardware platform for the displaying of e-books), and health-care.23
Diversity in products enhances Foxconns market competitiveness. The company is
progressing into high-end fields of nanotechnology, heat transfer, wireless
connectivity, material sciences, and green manufacturing processes, obtaining over
30,000 patents worldwide.24

Foxconn is able to shorten its supply chain by manufacturing some of parts in-
house. Spokesman Arthur Huang explained the companys cost-saving strategy:25

We either outsource the components manufacturing to other suppliers, or we


can research and manufacture our own components. We even have contracts
with mines which are located near our factories.

Business integration is central to Foxconns expansion and development. In vertical


integration, Foxconn synthesizes two specialties to offer customers cost-effective
advantages:26

There are two categories of manufacturers in the information and


communication technology (ICT) supply chain. The first focuses on the
design and assembly of electronic components such as circuit boards, data
storage or displays.The second category focuses on making the structural
elements for electronic products (the enclosures or cases for electronic
products).Foxconn has integrated these two formerly separated specialties
to create a new, more efficient business model.

Foxconn undercuts its competitors on the price, speed of delivery, and quality of its
finished products. Nowadays, Foxconn possesses a large team of engineers and
marketing managers and the company has built a client base worldwide.

23
Foxconn Technology Group, CSER Annual Report 2009, (2010), pp. 7-8.
24
Foxconn Technology Group, CSER Annual Report 2009, p. 15.
25
New York Times, 6 July 2010, iPhone Supply Chain Highlights Rising Costs in China.
26
Foxconn Technology Group, CSER Annual Report 2008, p. 10.

7
Foxconn ranked 112th by annual revenue in the Fortune Global 500 in 2010
larger than some of the companies for which it manufactures products such as
Microsoft and Intel. In July 2010, Foxconn surpassed Quanta Computer to become
Dells third largest supplier of laptops, and will fulfill four to five million laptop
orders for Dell in 2011.27 By December 2010, Foxconns laptop shipments to HP
could reach 12 million units, and total shipments to HP will increase to 20 million
units in 2011.28 Foxconn secures made-to-order businesses from top technology firms,
and increasingly auto brands and medical equipments and healthcare firms,
diversifying product markets around the globe.

To cope with the market needs, as of mid-2010, it was estimated that Foxconn
had built a huge 1,000,000-strong workforce worldwide, including more than 900,000
in China alone; 85 per cent of the Chinese labourers in Foxconn are young people
from rural areas who were born after 198029the children of the reform era has
grown up, forming a new generation of migrant workers.30 China provides the most
fertile ground for capital to grow and the newly formed working class to suffer
simultaneously.

SEGMENTED POLITICAL REGIME AND CAPITAL EXPANSION

Our research questions are: What are the social and political origins of the advent
of the monopoly capital in China? Why could this miracle of Foxconn expansion be
possible in China? A detailed study of Foxconn can provide a clue to these questions.
Foxconn is extremely competitive at taking advantage of Chinas economic policies in
promoting foreign investment and manipulating regional competitions among local
states. The facilities of Foxconn are located in four strategic geographic regions across
the country:31

1. The Pearl River Delta : Shenzhen , Dongguan , Foshan


, and Zhongshan ;
2. The Yangtze River Delta : Shanghai , Kunshan ,
Hangzhou , Ningbo , Nanjing , Huaian , Jiashan ,
and Changshu ;

27
Digitimes, 22 July 2010, Wistron, Compal Still Top-2 Notebook Suppliers for Dell in 2011;
Foxconn Advances to Third.
28
Reuters, 22 July 2010, Hon Hais 2011 Laptop Shipments Seen up over 70 per cent.
29
Zhongguo Qingnian Bao (China Youth Daily), 20 May 2010, Fushikang Xinwen Fayanren Huiying
Jiu Lian Tiao (Foxconn Spokesperson Responds to Nine Successive Jumps).
30
All China Federation of Trade Unions, Guanyu Xinshengdai Nongmingong Wenti de Yanjiu Baogao
(Research Report on Problems of the New Generation of Chinese Migrant Workers), (2010).
31
Foxconn Technology Group, Global Distribution.

8
3. The Bohai Gulf area of North China : Beijing , Langfang ,
Qinhuangdao , Tianjin , Taiyuan , Yantai , Yingkou
, and Shenyang ;
4. The cities in Central, West, and South-West China: Chongqing ,
Chengdu , Zhengzhou , Wuhan , Jincheng , Nanning ,
Beining , Beijiang .

Foxconns access to resources and talent in major Chinese cities is fundamental to its
growth.

We argue that this process of capital expansion is mostly state-driven and led by a
segmented political regime.32 By segmented political regime, we mean that a state
posses a divided nature when it creates a growth model by heavily intervening into the
economic development process while it retreats from the social and civic sphere by
providing social and labor protections. In the eyes of western analysts, the Chinese
state looks very strong by reshaping its role in the new global economy and resuming
its economic miracle after the financial crisis of 2008. A paradoxical phenomenon is
that when we see this state-in process in putting China onto the track of economic
globalization, it is accompanied by a state-out process when the state is radically
retreated from the areas of social reproduction and social protection.33 Hence, in the
eyes of Chinese peasant-workers, they found their government, especially local
government is kept in a state of inertia when their basic human and labor rights were
violated and when they are in need of help from the state.34

China has emptied out it socialism nature and transformed itself into a neo-liberal
state, even though there is an argument that post-socialist China is not evolved from a
legacy of liberalism.35 Subject to the logic of corporate economic development that
withholds the policies of privatization and commercialization, the nature of Chinese
state has been greatly changed in spite of the constraint provided by the legacy of a

32
David Zweig, Internationalizing China: Domestic Interests and Global Linkages (New York: Cornell
University Press, 2002); Doug Guthrie, Dragon in a Three-Piece Suit; Doug Guthrie, China and
Globalization; Mary E. Gallagher, Contagious Capitalism; Scott Wilson, Remade in China.
33
Pun Ngai, Chris King-Chi Chan, and Jenny Chan, The role of the state, labour policy and migrant
workers struggles in globalized China, Global Labour Journal, Vol. 1, No.1 (2010), pp. 132-151.
34
Hai-Rong Yan, New Masters, New Servants: Migration, Development, and Women Workers in China
(Durham: Duke University Press, 2008); Dorothy J. Solinger, Contesting Citizenship in Urban China:
Peasant Migrants, the State, and the Logic of the Market (Berkeley: University of California Press,
1999); Anita Chan, Chinas Workers under Assault; Ching-Kwan Lee, Against the Law; Chris King-Chi
Chan, The Challenge of Labour in China: Strikes and the Changing Labour Regime in Global
Factories (London: Routledge, 2010); Jenny Chan, Meaningful progress or illusory reform?
Analyzing Chinas labor contract law, New Labor Forum, Vol. 18, No.2 (2009), pp. 43-51.
35
Andrew Kipnis, Neoliberalism reified: suzhi discourse and tropes of neoliberalism in the Peoples
Republic of China, Journal of the Royal Anthropological Institute, Vol. 13, Iss.2 (2007), pp. 383-399.

9
socialist state.36

The change in the nature of the Chinese stateat different levelshas been
colluded with the interests of transnational capital in its plight of off-shore production
relocation. The Chinese national state took a lead in introducing pro-market
initiatives, especially foreign investment into the inland of China. The coastal export-
led growth model was extensively promoted and replicated in cities and towns of
nearly all provinces. Local states race to promote economic growth by actively
creating a business-friendly environment. The reregulation of local governments
differentiates themselves from the others in competing for investment, in the words of
Steven McKay (emphasis original):37

Policies ushering in market liberalization are necessary [but] they are not
enough. Instead, selective deregulation is increasingly being augmented with
more sophisticated industrial and investment policies that amount to a
reregulation of the economy and the labor market that can provide a secure,
probusiness environment in which firms have more control over the
processes and factors of production.

Following the state-promoted go-west strategic development plan, Foxconn swiftly


tapped into the privileged trade and economic policies, as well as the pool of unskilled
and skilled laborers subsidized through government vocational training programs.

In a short time span of two to three years, Foxconn newly set up mega-plants in
hundreds of thousands in Chongqing municipality, Zhengzhou the provincial capital
of Henan, and Chengdu the provincial capital of Sichuan, thanking to local Chinese
states offer of generous economic packages. For a notable example, in 2009, Foxconn
and other electronics makers gained from the governments fiscal stimulus package to
set up new facilities in Chongqing municipality.38

Chongqing launched its Warm Winter stimulus plan [followed the global
financial crisis of 2008], spending vast sums, including credit programs to
allow many of the 3.5 million unemployed workers to start their own
businesses, providing loans and credit guarantees to small business,
launching start-up industrial parks, providing direct subsidies to 1,500
36
Dorothy J. Solinger, States Gains, Labours Losse; You-Tien Hsing, Making Capitalism in China:
The Taiwan Connection (New York: Oxford University Press, 1998); Ya-Sheng Huang, Selling China.
37
Steven C. McKay, Satanic Mills or Silicon Islands? The Politics of High-Tech Production in the
Philippines (Ithaca: Cornell University Press, 2006), p. 43.
38
The Nation, 18 November 2009, Chongqing: Socialism in One City.

10
businesses.

Chongqing officials39 have also granted Foxconn a discounted corporate income tax
rate of 15 per cent, ten per cent lower than the usual rate. Moreover, the local
government will lengthen the airport runway by 400 meters to meet increasing
transportation and logistical needs.

Hence, Foxconn is actively moving manufacturing to inland cities to save on


production costs and to tap more business opportunities. While the Chinese
government froze minimum wage requirements throughout 2009 due to the economic
crisis, since early 2010, a number of cities raised minimum wages up to 30 per cent.
Due to severe regional competition for foreign investment, local states in the central
and western cities promulgated far lower minimum wage standards than that of the
coastal cities (see Table1).

Table 1: Legal minimum wage by selected Chinese cities, 2010


Wage (RMB/month)
Chongqing 680
Zhengzhou, Henan Province 600 or 700 or 800 [location-specific]
Chengdu, Sichuan Province 780 or 850 [location-specific]
Taiyuan, Shanxi Province 850
Beijing 900
Langfang, Hebei Province 900
Wuhan, Hubei Province 900
Tianjin 920
Yantai, Shandong Province 920
Kunshan, Jiangsu Province 960
Hangzhou, Zhejiang Province 1,100
Shenzhen 1,100
Shanghai 1,120
Source: Chinas Ministry of Human Resources and Social Security, 2010.

Chinese manufacturing wages as a percentage of US wages, compared to those


of Japan and East Asian Tigers like South Korea and Taiwan in the early years of their
economic takeoffs, have remained consistently low. The Economist stated that as of
July 2010, the Chinese migrant workforce is still cheapjust 2.7 per cent of the cost
of their American counterparts.40 Based on government statistics, the labor income
share of Chinas gross domestic product (GDP) declined from 56.5 per cent in 1983 to
36.7 per cent in 2005; by contrast, many OECD countries maintained the ratio of

39
China Daily, 5 August 2009, HP, Foxconn to Build Laptop Manufacturing Hub in Chongqing;
China Daily, 6 August 2009, HP, Foxconn to Set Up Laptop Unit.
40
The Economist. 29 July 2010. The Next China.

11
labor returns to GDP at 60 per cent or more for the comparable period of 1978 to
2008.41 The export sector has turned most of its profits into enterprise savings,
dividends, and re-investment, rather than sharing it with workers. According to John
Knight, Deng Quheng, and Li Shi, migrant workers real wages recorded a positive
growth only since 2005, through 2009 at the time of economic downturn.42

Just like Foxconns race to fight for global production market, many inland cities
have competed fiercely for the chance to host a Foxconn base, dragging down
relocation costs. Zhongguo Xinwen Zhoukan (China Newsweek ) ran a
cover story titled fight to grab Foxconn (zheng qiang Fushikang ) in its
July 2010 issue at the height of a new round of coordinated efforts by local
governments to woo Foxconn.43 The technology giant will continue to increase
investment in western China, especially in Chengdu. A vice director of Chengdu Hi-
tech Zone44 recalled:

There was a great deal of negotiation involved over the last five years before
we got his [Foxconn CEO Terry Gou] investment. It was not easy for
Chengdu to stand out in those cities vying for investment.

In June 2009, Sichuan provincial and Chengdu city officials led a delegation to
Foxconn headquarters in Taiwan to sign a memorandum of cooperation. In 2010,
Foxconn registered to build Futaihua Precision Electronics (Chengdu) and Hongfujin
Precision Electronics (Chengdu), focusing on tablet computer and digital set-top box
assembly.45 Local government officials promised to facilitate more industries to
relocate from other parts of the country to go west to boost economic growth.

On 2 August 2010, Foxconn began production in Zhengzhou in central China. A


local government official said publicly, Weve provided many conveniences for
Foxconns locating here, such as opening a fast track for the import of its facilities and
construction materials.46 Foxconn rented a renovated factory and dormitory from the
41
All China Federation of Trade Unions, 12 May 2010, Laodong Baochou Zhan GDP Bili Lianjiang
22 Nian (The Ratio of Labours Share of GDP Decreased in 22 Successive Years); Renmin Wang
(People Net), 4 August 2010, Woguo Laodong Baochou Zai GDP Zhong Zhanbi Shinian Yizhi
Xiajiang (Labours Share of Chinese GDP Fell over the 10 Successive Years).
42
John Knight, Deng Quheng, and Li Shi, The Puzzle of Migrant Labour Shortage and Rural Labour
Surplus in China, Discussion Paper Series, No. 494 (July 2010), Department of Economics, Oxford
University, p. 32.
43
Zhongguo Xinwen Zhoukan (China Newsweek), Fight to grab Foxconn, No. 27 (July 2010).
44
China.org.cn, 28 October 2009, Cities Vie for Terry Gous Money.
45
China International Investment Promotion Platform, 28 July 2010, Foxconn to Invest US$64
Million in Zhengzhou and Chengdu.
46
Xinhua, 2 August 2010, New Foxconn factory in central China begins production with hope of
peace, prosperity.

12
local government for its 100,000 employees. Officials have allocated land for
Foxconn to build a permanent plant with an eventual capacity of 300,000 staff, where
the first phase of construction will cover 133 hectares.47

Provincial- and city-level states actively coordinate migrant workers and


mobilize students to high-tech, profitable companies. The creation of assets and
talents by the governments greatly reduce enterprises employment and skills training
costs. Henan officials from educational institutions and related departments, for
example, played an influential role in the cooperation between the vocational schools
and Foxconn: about 100,000 students were deployed to work at Foxconns Shenzhen
production facilities in the summer of 2010.48 In Chongqing municipality, 119
vocational schools promised to send students to work in Foxconn.49 This quality labor
supply, channeled from government educational bodies, is important for capital
located in the South and East China coastal regions where shortage for workers has
spurred higher wages; and those based in interior cities where business investments
are increasingly yielding high returns.

Nowadays not a single electronics company can be comparable to Foxconn. By


merger and exploration of favorable local labor markets, Foxconn builds up giant
plants to secure huge-volume orders from increasing numbers of brands and ruling out
potential competitors. It is obvious that Foxconn aims to consolidate its production
clusters across China to build a cost-competitive network. Local government
incentives and regional competition offered to Foxconn over these more than 20 years
have contributed greatly to its economic success. Beginning in the fall of 2010, the
company plans to open retail stores by their own previous production workers in
second or third tier cities and towns to sell electronics gadgets for domestic
consumption.50 Having a monopoly in the production chain by rapid expansion in the
electronics industry, this move into the retail sector is a strategic plan to link up its
production to retailing by further speeding up its capital accumulation process.

STATE-OUT AND YOUNG WORKERS INSIDE THE FOXCONN EMPIRE

This fast capital expansion was not only facilitated by a state-in process in
economic growth, but also highly benefited by a state-out process in the area of social
reproduction and the sphere of human and social protections for laborers. The state

47
Xinhua. 30 June 2010. Xinhua insight: Foxconns inland moving a win-win solution.
48
China Daily, 26 June 2010, Students Forced to Work at Foxconn.
49
Peoples Daily, 29 June 210, Foxconn Mulls Move Northward.
50
China Daily, 27 July 2010, Foxconn to Open IT Chainstores in Central China.

13
policy of contracting agricultural lands to individual rural households is the most
significant structural factor for China to enable a land enclosure movement: rural
laborers, who still kept their small pieces of land, were increasingly deprived of their
means of production, become increasingly proletarianized and are forced to leave
their land to seek ways of survival.51 Employing peasant-workers, factory employers
in China do not need to pay their workers a living wage or the full cost of social
reproduction of labor, which are supposed to be subsidized by the workers rural
communities. Local host governments likewise have shunned themselves from
improving the livelihood of internal migrant workers and their families under their
jurisdiction. This state-out process largely shapes a specific pattern of
proletarianization of Chinese labor and a specific capital-labor relationship which
adversely affects labor rights protections in China.

The process of (semi-)proletarianization in post-Mao Chinaturning rural


bodies into industrial waged laboris specific in the way the state has promoted
massive rural-to-urban labor migration over the past three decades. Owing to the deep
rural and urban divide highly shaped by the current development strategies, rural
authorities have submitted to the central governments direction by firstly sending
their rural laborers to support the development of coastal China, and then to their local
economic and technology zone set up in their own towns and cities. The migration
policy also assures a continuous replenishment of internal migrant laborers to the
production powerbases in the industrial zones. Strong state initiatives support the
labor needs of emerging industries and facilitate labor supply flow to the
manufacturing sites.52

The official categorization of peasant-workerswage laborers of rural


household registrationstill maintains that their social status and class identities
ambiguous. The post-socialist Chinese state has permitted them to go out to work but
not to grant them the right to urban permanent residence. Such maintenance of the
distinction between permanent and temporary residents by the household registration
system enables the states shirking of its obligation to provide housing, job security,
and welfare to rural migrant workers.53 As a result, the young migrant workers stay

51
Pun Ngai and Hui-lin Lu, Unfinished proletarianization: self, anger, and class action among the
second generation of peasant-workers in present-day China, Modern China, Vol. 36, No. 5 (2010), pp.
493-519.
52
Cindy C. Fan, Migration, hukou, and the Chinese city,in Shahid Yusuf and Tony Saich (eds), China
Urbanizes: Consequences, Strategies, and Policies (Washington: The World Bank, 2008), pp. 65-90.
53
Pun Ngai, Made in China: Women Factory Workers in a Global Workplace. (Durham: Duke
University Press, 2005); Kam-Wing Chan, The global financial crisis and migrant workers in China:
there is no future as a labourer; returning to the village has no meaning, International Journal of
Urban and Regional Research (July 2010), pp. 1-19; Pun 2005).

14
mostly either in factory dormitories or in substandard migrant villages within the city.
The dormitory factory regime hence stands as a remedial mechanism to support this
semi-prolectarianization process by temporarily keeping the laborers while circulating
them from one workshop to another. Attached to the dormitory factory regime, this
socio-political space keeps a highly uprooted workforce without the support of family
network and communal life.54

Local states have systemically withdrawn from safeguarding the interests of rural
migrant workers and underage students in corporate internships programs. A general
pattern is that the 16 to 18 years-of-age student interns have become state-approved
laborers in interning enterprises. Officials have not rigorously regulated the behavior
of companies that use student interns during the work-study schemes, in effect,
students-turned-laborers are super-low-cost, flexibly disposable workforce in the
global production process. Student workers in China are under-protected by existing
internship regulations and they are outside of the relationship of employment and
therefore not regulated by the Chinese Labour Law. Alongside their fellow migrant
workers, young students serve as compliant labour force on the production lines.

Foxconns biggest Shenzhen Longhua manufacturing campus is a typical


dormitory factory regime composed of more than 370,000 workers. This 2.3-square-
kilometer campus includes: Factories, dormitories, banks, hospitals, a post office, a
fire brigade with two fire engines, an exclusive television network, an educational
institute, bookstores, soccer fields, basketball courts, track and field, swimming pools,
supermarkets, and a collection of cafeterias and restaurants. The main campus is
equipped with the first-class production facilities and the best living environment
since it is the flagship and model factory for customers, central- and local-level
governments, and visitors from media organizations and other inspection units. In the
same city of Shenzhen, another production campus called Guanlan composed of over
120,000 workers had none of the additional facilities as in Longhua, except multi-
story factories and high-rise dormitories.

In other major Foxconn factory areas, the production scale and workforce size is
also very large. We easily identified Foxconn workers in their uniforms in public areas
when visiting the surveyed fieldsites. Within the wall of Foxconn, most of the
employees are young migrants who work and live on the campuses. In the survey, the
average age of Foxconn respondents is 21.1, the smallest 15. We discovered that
many of Foxconns different factories utilized student interns on a large scale: In a

54
Pun Ngai and Chris Smith, Putting transnational labour process in its place: the dormitory labour
regime in post-socialist China, Work, Employment and Society, Vol. 21, No.1 (2007), pp. 27-45.

15
workshop of 2,600 people at the Shenzhen Longhua CMMSG (Component Module
Move Service Group), around 1,000 were summer interns; at the Kunshan factory,
approximately10,000 out of 60,000 people were student workers; and at the Langfang
factory, it recruited at least 5,000 students to work on production lines during the
summer of 2010. To supplement our structured questionnaires, we document workers
narratives and field observations to present the working and everyday lives of the
young Foxconn employees. Our primary concern is the dominating mode of corporate
governance and its impacts on workers well-being.

Military culture

A leader, says CEO Terry Gou, must have the decisive courage to be a dictator
for the common good (ducai wei gong ). Under his leadership, the Foxconn
Longhua flagship plant has constructed its own city within Shenzhen City, where
company managers and security officers retain supra-governmental control over its
employees. An extreme example is that Foxconn workers who made emergency calls
to the police through in-factory telephones were automatically transferred to
Foxconns own private security department! There seems no alternate avenue for
workers to seek help and support. While Foxconn rapidly established an Employee
Care Center and opened a worker care hotline as suicides climbed up in May 2010, in
the interviews, we found that this care-for-worker center not only failed to meet
workers needs, but directly relayed information about workers requests for help and
complaints to management, actually infringing upon workers privacy and putting
tremendous pressure on workers. Specifically, the care center set up a 24-hour
notification system to identify workers with abnormal mental issues, but this caring
behavior is in effect a tool for Foxconn to monitor problem workers. If a worker is
reported, this information quickly reaches the workers direct supervisor. So under
its care workers are put even more within the factorys round-the-clock control.

Foxconn management has hired several thousands security guards to keep


internal order. Every factory building and dormitory has security checkpoints with
guards standing by 24 hours. They strictly control the production process and impose
an extremely rigorous entry access system. In order to enter the factory, workers must
pass through layer after layer of electronic inspection system, and unauthorized
persons are prohibited from entering factory areas. Assembly workers are allowed
access only to their affiliated business groups, who know little about the working
conditions in the neighboring department. Workers repeatedly expressed in interviews
that the entry access system made them feel as if working at Foxconn is to totally lose

16
freedom.

Workers wear uniforms color-coded by their department. Getting ready to start to


work on the production lines, management will ask the workers, How are you?
Workers must respond by shouting, at the same rhythm, Good! Very good! Very, very
good! This drilling and militarization of management of the working process is said
to train workers into disciplined labourers. Absolute obedience is a rule in Foxconn;
CEO Terry Gou proclaims, Outside the laboratory, there is no high-technology, only
execution of discipline. Workers, new and old, are always reminded by senior
management that they should obey all the instructions of the superiors without
question. A trainer at Wireless Business Group (WLBG) who was a former armed
police officer stated that challenging authority of the management in Foxconn implies
going against all security officers in the Longhua campus. Worker interviewees
commented that they were made to keep silence and surrender their dignity at work.

All Foxconn production workers, no matter whether they are going to the toilet
or going to eat, must be checked. Workers swipe electronics staff cards at the gates.
To thwart rivals intent on industrial espionage, the company has ruled that employees
are not allowed to bring music players or mobile phones onto the shop floor. While
we observed variations in carrying out the company rules by production units, the
workshops for producing Apple products are mostly strictly controlled. Body searches
are not uncommon. It is reported that men must take off belts with metal buckles and
women their wired bras before they can pass the electronics security systems. Some
workers feel that their lives are truly low-class and that they get no respect.

A tragic example was the death of Sun Danyong at Foxconns Longhua plant on
16 July 2009, following with a dozen of young worker suicides in Shenzhen to come.
Sun, a 25-year-old Yunnan graduate from the Harbin Institute of Technology, was held
responsible for losing one of 16 prototypes of Apples fourth-generation iPhone. He
jumped from the 12th floor of his apartment building to his death. Foxconn issued a
statement:55

Regardless of the reason of Suns suicide, it is to some extent a reflection of


Foxconns internal management deficiencies, especially in how to help young
workers cope with the psychological pressures of working life at the
company.

55
Renmin Wang (Peoples Net), 22 July 2009, Fushikang shenxian zisha Men (Foxconn deeply
troubled by suicides.

17
The psychological pressures referred to included being suspected of stealing,
interrogation, and solitary confinement by security officers, and having his home
searched. He was allegedly humiliated. His final online chat with his friends revealed
both his agony and relief, Thinking that I wont be bullied tomorrow, wont have to
be the scapegoat, I feel much better.56

In the name of keeping strict confidentiality for its buyers like Apple, HP, and
Nokia, Foxconn seems to endorse the behavior of its private security officers. Any
leak of business information will result in big financial losses. In this way,
technology multinationals have transmitted extreme pressure all the way down to the
Chinese shop floor. Foxconn workers are being watched on or off the production line.
In the gated workplace and living zone, the power of the security guards at Foxconn
has grown to a private army of police. Workers are afraid of frontline managers as
much as security guards.

The military methodology in Foxconn is a primary factor leading to both


workers pressure and poor relations between workers and management. Workers
made a mockery of Foxconns humane management as human subordination. A
male worker interviewee at the Hangzhou factory was punished for forgetting to fix a
screw in a mobile phone and he was asked to copy the quotations of Terry Gou 300
times, such as A harsh environment is a good thing. Our quantitative findings
revealed harsh and inhumane treatment of workers by management and security; they
have either personally experienced or witnessed the follow:

34.7 per cent of respondents: have been harassed, embarrassed, and disconcerted;
27.9 per cent of respondents: have been abused and insulted; and/or
16.4 per cent of respondents: have been corporally punished.

Workers elaborated in detail how they were scolded and punished when they talked on
the line, failed to catch up the high speed of work, and made mistakes in work
procedures. Several women workers from Foxconns Guanlan factory were working
on the soldering line attaching speakers to MP3- and MP4-format digital audio
players. They gave a concrete example about their negative working experience:

After work, all of usmore than 100 personsare made to stay. It happens
whenever workers get punished. A girl is forced to stand at attention to read

56
Nanfang Dushi Bao (Southern Metropolis Daily), 21 July 2009, 25 sui yuangong yizao gaoguan
jujin oudahou tiaolou shenwang (25-year-old employee jumped to his death, allegedly detained and
assaulted by senior staff).

18
aloud a statement of self-criticisms. She must be loud enough to be heard.
Our line leader would ask if the worker at the far end of the workshop could
hear clearly the mistake she had made. Oftentimes girls feel losing face. Its
very embarrassing. Her tears drop. Her voice becomes very smallAnd yet
the line leader shouted out: If one worker loses only one minute [failing to
keep up with the work pace], then, how much more time will be wasted in
100 people?

Line leaders, who are also under pressure, tend to treat workers in a harsh way to
reach the productivity targets. Management cares little about workers feelings and
pressures and the only thing that matters is the output of the day. Public humiliation
and confession in the public is a frequently used management method. Workers are
placed at the bottom rank of the company hierarchy and they are not treated with
respect.

Factory-floor managers and supervisors often give lectures to production


workers at the beginning and the end of the work day. After working for a long shift,
workers still have to stand for often 15 minutes to half an hour and listen to speeches.
Indeed, the content of the meeting remains the same: the management evaluates the
production target of the previous shift, reminds workers of the tasks they need to pay
special attention to, and work rules and regulations. Workers know too well that
branded electronics products are expensive and there is no margin for mistakes. The
tragedy of 19-year-old Ma Xiangqian, dubbed the first death in the rash of suicides
at Foxconns Shenzhen facilities beginning from January 2010, was closely linked to
Foxconns heavy-handed practices in the workshop. Ma Hui, elder sister of Ma, said
that Ma was unhappy because of the manager, and he was planning to quit.57 Ma
Liqun, third sister of Ma and a 22-year-old assembly worker also at Foxconn,
testified:58

The factory was always abusing my brother. He hated the job he had held
only since Novemberan 11-hour overnight shift, 7 nights a week, forging
plastic and metal into electronics parts amid fumes and dust. His pay stub
shows that he worked 286 hours in the month before he died, including 112
hours of overtime [more than three times the 36-hour legal limit].

Ma Xiangqian felt miserable at work. He had told family that he was stressed and

57
Guardian, 28 May 2010, Foxconn offers pay rises and suicide nets as fears grow over wave of
deaths.
58
The New York Times,6 June 2010, After suicides, scrutiny of Chinas grim factories.

19
demoralized after being demoted to scrubbing toilets.

In our interviews in Foxconns Langfang factory area, several male workers at


the mobile phone assembly workshop expressed openly:

We get yelled at all the time. Its very tough around here. Screwing people
and subordination summarized the management methodology. We are
trapped in a military barrack of disciplineFoxconn manages us by the
principle of obedience, obedience and absolute obedience! Must we
sacrifice our dignity as people for production efficiency?

The relationship between lower-level managers and assembly workers are


characterized by Foxconns apparent disregard for human dignity. The rigid labouring
process has resulted in severe alienation of labour and exploitation of workers. The
predicament to workers is:

For people treated as machines, life becomes meaningless.

Not surprisingly, when we asked workers what needs to be improved at Foxconn,


most responded that frontline management should be more civil, listening, and be fair
to all. However, Foxconn executive vice president Cheng Tianzong told media:59

Foxconn will not make big adjustments or change its management mode, due
to the need for discipline and supervision on the manufacturing assembly
line.

In the investigation, whenever we mentioned the chain of suicide jumpers, the


overwhelming majority of respondents from management to frontline workers gave an
unusually detached and cool response. However, when asked about the factory
management system and their personal experience of working life, nearly all workers
totally lost their cool and spoke their mind: they felt dry-as-dust, exhausting,
underpay, not-being-respected, without prospects, and meaningless. Foxconn, a
supply kingdom for the whole world, is cutting costs in every possible way,
disregarding workers welfare and benefits.

Wages and working hour

Foxconn has more than 500,000 employees in Shenzhen City alonea majority

59
Beijing Review, 31 May 2010, Foxconn under pressure from employee deaths.

20
of the 937,000-strong Chinese workforce, where the Longhua and Guanlan
manufacturing facilities are among the largest in the industry. Under the direct
pressure of Apple and other buyers, and motivated by the company and its
shareholders profit maximizing goal, Foxconn, as of May 2010, paid production-line
workers only 900 yuan per month for a 40 hour week, which was the legal minimum
local wage rate. This subsistence level wage is not enough to meet workers needs and
compels workers to work up to 100 hours of overtime a month, close to three times
the maximum 36 hours permitted by Chinese labour law (Article 41).

For example, Ma Liqun, former assembly worker in Shenzhen Guanlan factory


and sister of Ma Xiangqian who died in January 2010 (dubbed the first death),
informed us the long-standing problem of low wages, in view of high local cost of
living: After deducting mandatory social securities, we earn only some 800 yuan a
month. No one seems to force us and yet weve no choice but to do overtime work. It
is extremely difficult for us to live in an expensive city on a meager wage of several
hundreds yuan. Another production worker in Shenzhen Longhua factory showed us
his wage stub for May 2010:

My total monthly income is 2,149.5 yuan, in which the basic pay is 900 yuan.
All the remaining income is my overtime payment for 136 hours.

His example shows that 60 per cent of the total wage is from doing overtime work. In
the survey, more than 80 per cent of the respondents had four days of rest or less in a
month during the peak seasons (by contrast those who enjoyed regular double-day
off per week were managers and clerical staff). Our findings, based on 12 Foxconn
factory investigation, is highly consistent with that of the 5,044-person survey
conducted by the Shenzhen Human Resources and Social Security Bureau: 72.5 per
cent of the Shenzhen Foxconn workforce put up with excessively long working hours
to earn extra income.60 The most notable characteristics of Foxconns production
system are low wages and extremely high working pressure.

Having been named a sweatshop, Foxconn rebuked by claiming that it has


been in compliance with Chinese labour law and corporate code of conduct and no
labour rights violations have been found. A company statement dated 11 October 2010
reads:

Chinese government law states that employees can legally request overtime
60
Diyi Caijing Ribao (China Business News), 17 June 2010, Fushikang 6 nian 5 zhangxin shiji
bianhua buda (Foxconn raised wages for five times in six years, with no substantial change).

21
work in excess of the government-mandated maximum of 36 hours per month
and our policy is to honor such voluntary requests.

Foxconn not only failed to substantiate the claim by presenting the Chinese
government law in reference, but also attempted to cover up its illegal act.
Nominally voluntary requests for overtime, actually this is a disguised form of
coerced overtime because at the beginning of each month, Foxconn requires workers
to sign a formal, written agreement regarding excessive overtime work. Moreover,
this agreement is nonsense in China where workers enjoy no effective protection from
getting fired for refusing overtime.

In our interviews, workers described exhaustion to the point of tears. Workers


expressed that when production quotas were not completed, managers would force an
entire production line of workers to do mandatory overtime. In managing the crisis of
the string of 13 suicides during a five-month period, Foxconn declared that it would
limit overtime working hours to no more than 60 hours per week (in which 20 hours
is overtime), or 80 hours per month, beginning from June 2010. Meanwhile, the
company would raise basic wages in all of its operations in China. Our findings
revealed that Foxconn failed to implement both remedial actions.

In Shenzhen, Foxconn announced a 30 per cent pay raise to 1,200 yuan per
month beginning from 1 June 2010, attracting widespread media attention. However,
the high pay only lasted for a month. In July, the local government raised the
minimum wage to 1,100 yuan per month. Thus the basic wage of frontline workers in
Foxconn is currently only 100 yuan or 9.1 per cent more than the minimum level.
Basic wage in Foxconn is still far below living wage. Under tremendous pressure of a
global consumer boycott, which might tarnish company image and hurt corporate
profits, Foxconn announced a second pay raise in basic wage to 2,000 yuan in early
June 2010, taking effect on 1 October the same year. Beginning in October, Foxconn
has hyped in every major media that frontline workers base wages were already
increased to 2,000 yuan. According to our investigations in 12 factory areas, workers
had not been given any exact information about the wage increase, and not all
workers would get this second wage increase opportunity. Workers stated that
according to managers, Only workers who have worked at Foxconn half a year are
qualified to be considered for higher pay; and Only a portion of experienced and
skilled workers may be entitled to the increased wage. By the end of October, still
none of the workers we interviewed could tell the detail of the new wage policy,
which reflected an extremely low level of transparency and accountability in

22
Foxconn, where workers were deprived of their right to know about their wages and
work conditions. Concerned public raised serious doubts about the company
statement that some 85 per cent of [the] workforce was qualified for the wage
increase.

For a basic wage paid on the legal basis of normal 40-hour work weeks, the
Foxconn wage system should be instituted to all production workers without
discrimination, or additional conditions such as performance tied to productivity or
work attitudes. All the workers should enjoy their rights to fair treatment of same pay
for the same work. It was not until the second week of November did we confirm that
a small portion of interviewed Foxconn workers in Shenzhen received 1,200 yuan
basic wage plus 800 yuan special allowance. This structure of wage composition is
confusing because workers are not paid a clean-cut 2,000 yuan for a basic monthly
wage. The circumstance under which an allowance is offered remains unclear, and
the allowance can be taken away by management, leaving workers unprotected.
Equally important, an overwhelming majority of our interviewees, including new
workers who had not worked continuously for 6 months, student interns (on short- or
long-term internships), and workers who were deployed from Foxconn factories
outside of Shenzhen to fill the rushing ordersall reported that their basic monthly
wages were merely 1,200 yuan, with some even below the local legal minimum
standard.

Worse yet, worker interviewees informed us that Foxconn had eliminated


benefits including seniority stipends and quarterly bonuses to cancel out the increase
in basic wages. Since June 2010, workers outrageously found that when overtime
surpassed 80 hours, they were not paid overtime wages for the extra portion. Each and
every worker respondent criticized strongly that the incomplete recording of overtime
hours was deceptive. According to the Chinese law, workers should be paid at least
1.5 times the normal wages when working overtime on weekdays, two times on
weekends, and three times on national holidays. In addition, Foxconn meetings
scheduled on each morning and evening took a large quantity of workers off time,
and these formal working hours were not compensated, which was unlawful. As a
result, many workers indicated that their actual monthly income did not increase in
any significant way.

Foxconn adheres to a two-shift manufacturing system and a work shift typically


lasts 12 hours. In the wake of worker suicide, the management slightly reduced the
daily working hours to ten but still kept a six-day work week. Every day workers

23
move in the same direction, queue up, and punch in their timecards. In a number of
production departments where our researchers worked alongside assembly-line
workers, they had to stand for at least ten hours while working. Managers did not
provide seating on the factory floor. It is a belief in the electronic industry that
workers standing at work will keep them wake up and increase production efficiency.
In Super Precision Mechanical Business Group (SHZBG) in Shenzhen Guanlan
factory, a female worker said:

We have to stand all day long. Even worse, we have to stand like a soldier. I
am totally exhausted after non-stop work. I know that some workers can sit
but they also sit in a straight line.

Foxconn workers submitted themselves to management scrutiny on the job, and their
low income and limited free time restricts their options outside of work. They have
lost any sort of work-life balance, even if there are entertainment facilities in the
Foxconn campus. The result is a community of working class under intense stress
with few resources where it is much more likely for workers to succumb to
depression.

Production intensity and work pressure

Workers expressed that after the basic wage increase to 1,200 yuan in June 2010,
a clear increase in production was scheduled and production intensity increased. If
most of the workers were still being excluded from a real increase in income, they
testified that managers forced all of them to meet higher production targets and
henceforth their work intensity doubled. A group of young workers at the Shenzhen
Guanlan factory responsible for processing cell phone casing said, The production
output was set at 5,120 pieces per day in the past but it had been raised by 20 per cent
to 6,400 pieces per day during these months. We were completely exhausted.
Management used stop-watches and computerized industrial engineering device to
test the capacity of the workers and if workers being tested were able to finish the
quota, the target will be increased day by day until the capacity of the workers
maximize. Another group of male workers at Kunshan factory commented, We
cannot stop for a minute from work. We are even faster than machines. A young
woman worker also said:

Wearing gloves would eat into efficiency, we have a huge workload every
day and wearing gloves would influence efficiency. During really busy times,

24
I dont even have time to go to the bathroom or eat.

Foxconn claimed that workers have a ten-minute break every two hours but many
workers responded that there is no recess at all. In some production departments
where workers nominally can take a break, they were not allowed to rest if they failed
to meet the hourly production target. Working overtime through the night in the
electroplating, stamping, and polishing departments was the toughest to the
interviewed workers.

Buyers of Foxconn products want their computers and iPhones manufactured fast
enough to meet global demand. For example, Apple is trying to get its white models
of iPhone 4 out to the market without delay, while keeping up with the availability of
iPhone 4 black models. This drive for productivity and quality leads to constant
pressure on Foxconn workers. The electronics parts and components are assembled
quickly as they move up the 24-hour non-stopping conveyor belts. Posters on the
Foxconn workshop walls and between staircases read:

Value efficiency every minute, every second (zhongshi xiaolu fenfen


miaomiao );
Achieve goals unless the sun no longer rises (mubiao dacheng, chufei taiyang
buzai shengqi );
The devil is in the details (mogui dou cangzai xijie li ).

Workers are organized into production lines in fixed seating or standing positions for
a typical shift of ten to 12 hours, leading to widespread physical and psychological
damage. At Foxconns Wuhan factory, a male worker described his physically
demanding work: The equipment weighs several kilos, and after using it for a day
your shoulders sore, your arms hurt, and your hands tremble incessantly. Just
yesterday a workers shoulder was so hurt he couldnt move it. In the survey,
workers biggest complaints about the working environment are about dangers from
heavy assembling and processing assignment, high temperature, noise, dust, and toxic
gases or harmful substances. Labour safety protection is severely inadequate.

Each frontline worker specializes in one specific task and performs monotonous,
repetitive motions at high speed. The rotating day and night shift system and extreme
work intensity take away any of workers feeling of freshness, accomplishment, or
initiative toward their work. Workers remarked, The air conditioners are only here
for the sake of the machinery. In the production process, workers occupy the lowest

25
position, even below the lifeless machinery. Workers come second to and worn out
by the machines was one workers insightful summary of the worker-machine
relationship. The others shared a sense of low self-worth: I am just a speck of dust in
the workshop. This is the renewed sense of self that arises after countless lectures
from section leaders and production line leaders.

Workers awareness of their positions was painful: Fate is not in your own
hands but in your superiors. On Foxconn factory floors, conversation on the
production line between assembly workers is forbidden. Youll receive a warning
letter for breaking the rule, a Guangxi female worker from Foxconns Shenzhen
Guanlan plant said. Managers operated a policy of demerit points to drive workers to
work harder. A 22-year-old worker explained:

The policy is used to penalize workers for petty offences. You can lose points
for having long nails, being late, yawning, eating, or sitting on the floor.
Theres a whole load of things. Just one point means losing my monthly
bonus.

Workers reported that they have to compete with each other to get the production
bonus. In the workshops where our researchers conducted participant observation, a
company job-evaluation system of Grades A, B, C, D, and Distinction was applied to
prompt workers to do overtime work and not to take leave, otherwise the bonus would
be deducted. Sometimes management may set traps to test the vigilance of workers,
for example, they may take away a component of a product and if the workers on the
line concerned cannot discover the flaw, they as a collective will be punished. In a
factory when the discipline is tough, it comes down level-by-level from the top, and
the shop floor becomes unbearable.

A long working day of nervous silence, apart from the noise of the machines, is
the norm. Workers suffered isolation and high work pressure. On 6 April 2010, Rao
Shuqin an 18-year-old Jiangxi worker, jumped from the seventh floor dormitory but a
tree broke her fall.61 She had worked in Foxconns Shenzhen Guanlan plant for just a
month, inspecting parts and components under the microscope. When she got off
work, she could not see clearly for hours. The change of work shifts confused her
body clock, adding to her tiredness. And yet she believed that it was difficult for her
to resign without losing her wages. In the survey outside of Foxconns Hangzhou

61
Xinhua, 26 April 2010, The truth behind the massive attempted suicides of Foxconn employees.

26
factory, a woman worker who just quitted said, It is such as cold environment in the
shopfloor which makes me feel depressed. If I continue to work at Foxconn, I may
commit suicide too.

Foxconn workers both dead and alive are alike in their struggle against hardship.
The suicide jumpers chose to use their own flesh and life as a means of accusation;
while living workers quietly endure the forced enslavement of their bodies and minds,
pushed to the brink of spiritual death, unsure whether they must comply with the
terms imposed by management and not knowing what the future will bring.

Loneliness and fragmented lives

Foxconn provides workers with conveniences like a collective dormitory,


canteen, services, and entertainment facilities in order to incorporate the entire living
space in the factory management, serving the just-in-time global production strategy.
To a large extent, workers living space is merely an extension of the workshop. Food
and drink, sleep, washing and other aspects of workers daily lives are scheduled just
like the production lines, with the goal not to satisfy workers needs as people but
rather to reproduce workers physical strength at the lowest cost and shortest time in
order to satisfy the factorys production requirements. But there is no true rest even
after getting off from work at Foxconn. Workers with different jobs and even night-
shift and day-shift workers are mixed into the same dormitory, as a result, workers
frequently disrupt each others rest because of different working hours. In addition,
random dormitory assignments often break up existing networks of social relations,
hindering communication and interaction between workers. Living in the dormitory
resembles living in a prison, echoed among the worker interviewees. In this lonely
space, workers have forfeited their personal and social lives.

Inside the Foxconn Hangzhou factory compound there are 7 dormitory buildings.
Each of the building has six storys and 30 rooms on each floor, housing 10 workers in
a room. Dormitory gates close at 23:30 and lights are switched at 00:00. Workers have
to take turns to clean the public area of the dormitory voluntarily to obtain the
right to free residence. If workers violate the dormitory rules such as returning late
to the dormitory, they have to confess their wrongdoings. On the open confession
letter, the name, worker I.D. number, worker card with photo will be shown, including
a statement: It is my fault. I will never do it again. Workers commented that they
are imprisoned in Foxconn Factory.

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All the Foxconn production sites were featured by a combination of factories and
dormitories, but its Shenzhen facilities were having an astonishing number of 33
company dormitories, and another rented 120 dormitories in the nearby community.62
Most migrant workers live on-site in these dormitories but they do not have a normal
life in their homethey are living with strangers, not allowed to cook, and not
permitted to receive friends or families overnight. Whether the worker is single or
married, he or she is assigned a bunk space for one person. The private space is
virtually reduced to ones own bed behind a self-made curtain.

From the perspective of labour control, these factory-provided dormitories mean


that production and labour reproduction activities take place in a self-contained, all-
encompassing geographical locality. It facilitates flexible production by imposing
overtime work on migrant labour as the distinction between home and work is
blurred. Foxconn production workers are often required to work overtime and
irregular shifts. The lengthening of a work-day to 24 hours to meet the global
production schedule means that the appropriation of labour surplus is absolute.63 Such
socio-spatial arrangement strengthens managerial domination, wherein control over
labour is extended from the factory shopfloor to the sphere of everyday life. The
dormitory labour system is a cost-efficient solution for companies like Foxconn to
ensure that workers spend their off-hours just preparing for another round of
production.

A few Foxconn employees choose to rent small apartments with friends and
relatives outside the factory insofar as they can afford them. While Foxconn workers
can feed themselves on their low incomes, they can hardly satisfy their overall social
and familial needs. Most of the front-line workers are unable to create their own
homes in the local society, and the host governments have not provided these non-
permanent residents with basic public services either. The highly marketized
community outside of the factory has no living spaces for workers. In many places not
only is public security poor and robberies frequent, but as soon as there is wind of a
salary increase, rent and living expenses on the factory periphery will rise
accordingly. Thus, workers face a double pressure in social spaces within and outside
the factory, to the extent that in actuality workers are stripped of social living spaces.

In the wake of 7 successive suicides in the single month of May 2010, Foxconn

62
TechEye, 25 June 2010, Foxconn to hand over dormitory management to outsiders.
63
Foxconn male employee Yan Li reportedly died from exhaustion on 27 May 2010 after having
worked continuously for 34 hours. SACOM, 4 June 2010, Another Foxconn worker diesthis time
from exhaustion.

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dormitories at all factory areas throughout the country were all wire-grilled. The
company installed 3,000,000-square-meter safety nets, or what was called ai xin
wang, translated literally as nets with a loving heart. The nets were hung around
outdoor stairways of dormitory buildings to prevent employees from jumping.
Workers live even more like prisoners in a cage. While there is very little sharing
among fellow workers, the reasons go beyond the workers personalities. It is widely
believed that company policy intentionally lowers the possibility of workers getting to
know each other, to make it more difficult for workers to organize collective actions.
As a result, interpersonal relations between workers are not strong, despite the fact
they are in their 20s. Within a working and dormitory system that is so repressive to
workers bodies, minds and living spaces, ordinary workers can easily be forced to the
brink of collapse.

During our fieldwork, we visited one of the only two female survivors of the
chained Foxconn suicidal jumps, Tian Yu. In a white ward of the Shenzhen
Longhua Peoples Hospital lay the 17-year-old girl whose body was half paralyzed.
On 17 March 2010, this carefree girl who once loved laughing and flowers jumped off
the fourth floor of the Longhua factory worker dormitory. Compared with over a
dozen other young lives passed away, she was lucky; she lived. Yet in some ways she
is unluckier, because she is still paralyzed even after many surgeries over this half of a
year. In the labour concentration camp of Foxconn, Tian, similar to all other
Foxconn workers: go to work, return exhausted from overtime work, go to sleep, and
have no free time to themselves. She has no time even for her seven roommates
sharing the same dormitory room with. All the girls are from different work units and
different province regions, who are strangers. On the product-parts inspection line,
she was often reprimanded by her line leaders. When she did not receive her wage
card during her first wage paymentsolely because of the factory administrative
problems and the bad internal communication channels, she could not hold herself
from cumulated anger and profound disappointment but took her life in the early
morning.

Foxconn workers lack a means to appeal for help. Among the 1,736 survey
respondents, nearly 90 per cent of workers said they did not participate in a labour
union, 40 per cent said the factory had no union, and the predominant majority of
workers do not understand the function of a labour union. Apparently the Foxconn
union has hardly made any active effort to assist and protect workers, even when they
exist at all. Foxconn entered Shenzhen in 1988, but the Longhua plant set up a union
only at the very end of 2006 under the double pressure of media publicity over

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exposes of iPod manufacturing conditions there64 and mobilization by the Shenzhen
Federation of Trade Unions. Taking a closer look, the companys external
communications manager Chen Peng wears two hats as he is also the union
committee chairman. Despite the declaration by Foxconn Group Media Office
Director Liu Kun that that each and every business unit of all 30 Shenzhen production
plants are unionized, it is doubtful to what extent rank-and-file employees can
participate meaningfully in union activities. In particular, when workers faced all
kinds of practical problems and found their rights violated, the union officers were
missing from dispute resolution. In the interviews, respondents said that I have never
heard what the union does and The union is one entity with the factory. The union
has failed to monitor the legality of the companys operations. Worse still, some
interviewed workers believe incorrectly that the Human Resources Department is the
trade union. In its primary role to represent workers, the union has neglected its duty
and lost its voice.

Worker degradation and predicament continues. The phenomenon of poor


retention of staff at Foxconn is an indicator of the unsustainable factory regime,
despite the company provision of free food and lodging to employees. In the survey
we found that 56.3 per cent of respondents had not worked at Foxconn for half a year,
and clearly the companys employee turnover rate was very high and numbers large.
Foxconn is recruiting new workers from schools and agencies and through its own
incentivized job introduction scheme to quickly fill the vacancies. Meanwhile, a
Foxconn large-scale relocation and expansion project in China has been undergoing,
which will affect hundreds of thousands employees. However, the surveyed workers
are not informed about the corporate decision.

CONCLUSION

Chinas ascendancy as a global economic power with a strong and protectionist


state is simply not promising in the eyes of Chinese workers. A state-in economic
globalization with a proclivity towards pro-foreign investment and export-led
industrialism driven by GDP-growth logic is simultaneously accompanied by a state-
out process of social and labour protections. An active role of the state in providing a
legal framework to protect the new labourers was proved unsatisfactory if not self-
defeating. The race to economic development for the local governments is driven by
the same neo-liberal logic and hence it creates pressure not less than Foxconns race
to secure global production market. A contested state provided the social and political

64
Stephen Frost and Margaret Burnett, Case study: the Apple iPod in China, Corporate Social
Responsibility and Environmental Management 14 (2007), pp. 103-113.

30
origins for causing the advent of capital expansion and monopoly in China where is
now providing the best soil for the reproduction of expanded capitalism.

Chinas wage competitiveness is both the attraction for international and


domestic capital and the outcome of government policies. Since the mid-1980s, the
state development plans, in effect, bankrupted the countryside. The surplus
labourers left for more prosperous coastal cities to find work through their traditional
native-place networks. Meanwhile, local governments increasingly transferred rural
labour to urban-industrial districts through poverty alleviation projects, further
draining better-educated and able-bodied young people who are mostly needed to
build the local economy. The large volume of rural outflows is driven by an urban-
biased economic model. This extensive use of Chinese migrant workers in industrial
production is integral to a global dormitory labour regime.

The global race to bottom production strategy and competition for technology
upgrading could only be resulted in overwhelming suffering of the older and younger
generations of migrant workers. The Foxconn suicides have received much media
attention and yet many other workers toil under terrible conditions. At the root-cause
level, global brands have been pressuring suppliers like Foxconn to compete against
each other on price, quality, and delivery. To secure contracts, Foxconn minimizes its
costs to remain competitive, and transfers the pressure of increasingly low profit
margins to the frontline workers. Workers inevitably suffer as a result.

Foxconns strategy of low-cost, suppressed-labour-rights competitiveness is


neither economically sustainable nor morally supportable. As the biggest electronics
manufacturer in the world, Foxconn churns out massive volumes of goods designed
by global companies. Although its profit margins are slim, the technology group has
expanded both its market share and sales revenue. Still, the company does not provide
its employees a living wage. Excessive overtime, high level of work-related stress,
supervisor harassment, abusive workplace conditions, and disrespect for workers
right to union representation is built-in to the Foxconn management system. Under
these extreme conditions, at least 17 Foxconn employees chose to end their lives up
till August this year.

Workers-of-rural-origins are excluded materially and culturally. The younger


workers in particular find themselves insecure, neither belonging to the city nor
feeling able to return to a livelihood in the countryside. Everyday, hundreds of young
workers quit their jobs and leave the walled city of Foxconn. But those who hop to

31
other factories quickly find themselves being exploited in more or less the same way
as in Foxconn. Some have their employment histories brought to an end by industrial
accidents. Still some others, under desperate conditions, have taken their own lives.

Suicide is the most desperate form of protest. It should not be used as a means to
resist social injustice. Concrete improvements should start at Foxconn but not end
there. Without stronger protection of workers rights to strive for decent work, it
seems almost certain we will witness a growing roll-call of deaths.65

65
At the time of writing, a 23-year-old male worker committed suicide at Foxconns Shenzhen Guanlan
factory on 5 November 2010. Bloomberg, 5 November 2010, Foxconn says male worker found dead
at China campus.

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